Basing on Wage Order RB-CAR-19 “Prescribing the new minimum wage rates of private sector workers in the Cordillera Administrative Region,” which took effect on Aug. 20, 2018, the average salary for an ordinary worker in Baguio City and La Trinidad is P320 per day for all industries/sectors employing 11 or more or an estimated P8,320 per month and P310 for all industries/sectors employing 10 or less or an estimated monthly salary of P8,060.

For Tabuk City, Bangued, Bontoc, Lagawe, Banaue, Buguias, Bauko, Sagada, and Tublay, the minimum wage is P315 for all industries/sectors employing 11 or more while P305 for all industries/sectors employing 10 or less. For the other areas in the Cordillera, it is P300 for the normal working hours, which shall not exceed eight hours work a day.

Wage Order RB-CAR-19 is applicable to all workers in the private sector receiving minimum wage regardless of position, designation, status and irrespective of the method their wages are paid. However, the order does apply to domestic or household helpers since this sector is covered by a separate wage order; persons employed in the personal service of another; and barangay micro-business enterprises with certificate of authority issued by the Department of Trade and Industry under existing laws, rules, and regulations.

Nothing in the wage order will allow the reduction or elimination of any existing wage rates, allowances or benefits already enjoyed by the workers arising from laws, decrees, issuances among others, company policies and agreements.

Internationally, the two-tier system is a type of payroll system in which one group of workers receives lower wages and/or employee benefits than another. The two-tier system of wages is usually established for three reasons.

First is the employer wishes to better compensate more senior, ostensibly more experienced and productive workers without increasing overall wage costs; second, the employer wishes to establish a pay for performance or merit pay wage scheme that compensates more productive employees without increasing overall wage costs; and third, the employer wishes to reduce overall wage costs by hiring new employees at a wage less than the wage of incumbent workers.

In the Philippines, the Two-tiered Wage System (TTWS) is a reform that maintains the mandatory minimum wage setting under Republic Act 6727 or the Wage Rationalization Act, as the first tier (Tier 1) and complemented by a voluntary productivity-based pay scheme as the second tier (Tier 2). It was conceptualized in 2010 and implemented in 2012 with the support of social partners.

So how does the two tiered system work? Tier 1 is the mandatory minimum wage. In setting the mandatory minimum wage, Regional Tripartite Wage and Productivity Boards (RTWPBs) nationwide always refer to the official data on poverty threshold (National Statistical Coordination Board); prevailing average wage rates (labor force survey); socio-economic indicators such as consumer price index, inflation, employment, and gross regional domestic product.

Tier 2 is the voluntary productivity-based pay which is implemented through a labor-management mechanism, such as the productivity committee or any similar body. Workers’ representation in the productivity committees ensures fair and reasonable setting of performance criteria, standards, targets, and profit sharing scheme, among others.

RTWPBs issue advisories on productivity incentive pay schemes as reference of workers and enterprises in the implementation of productivity improvement and gain sharing programs and identify priority or growth industries including their supply chain, as the subject of their advisories. Industry players participate in the crafting and issuance of their advisories, including advocacy campaigns and monitoring of its implementation. The advisories shall form part of the voluntary codes of good practice in the various regional industry tripartite councils in line with the envisioned industry self-regulation.

The TTWS will set a genuine floor or minimum wage for better workers protection and sees to it that the minimum wage is slightly above the poverty threshold to help workers and their families meet their basic needs but should also not exceed average wage, taking into account employers’ capacity to pay.

The grant of productivity performance-based pay will benefit both workers and employers since it will help raise workers’ standard of living while encouraging workers and enterprises to become more competitive and productive.

Productivity-based pay is voluntary, flexible, and negotiable. RTWPBs will issue productivity-based pay advisories on various productivity improvement and incentives schemes, including the performance and outlook of the industry, labor market conditions, and other related indicators as reference in the design of the enterprise’s productivity incentives program.

In the Cordillera, the RTWPB is composed of DOLE-CAR Regional Director Exequiel Ronie A. Guzman as board chairperson and the members of the board are regional directors Milagros A. Rimando of the National Economic Development Authority and Myrna P. Pablo of the Department of Trade and Industry; certified public accountant Juan Johny dela Cruz and businessman Alfonso T. Lao as employers’ representatives; Atty. Milton L. Balagtey and Engr. Renerio C. Lardizabal Jr. as employees’ representatives; and Augusto L. Aquillo as board secretary IV.

The RTWPB-CAR is located at 3rd floor DOLE Bldg., no. 1 Cabinet Hill, Baguio City. One can call them at (074) 300-3452 and 424-3416 or can email them at rtwpbcar@yahoo.com.

END/Patrick T Rillorta